Recovery Board opens next frontier in financial accountability

A funny thing happened when Congress approved the American Recovery and
Reinvestment Act in February
2009.

While politicians debated whether in was wise to invest more than $804 billion in
an effort to stimulate the
economy, lawmakers added a provision to the bill giving the Recovery
Accountability and Transparency Board,
an independent, non-partisan, non-political agency, oversight of the funds.

The "RAT Board" had two goals. One was to provide transparency over the Recovery
money, and the other was
to root out fraud, waste and mismanagement in the spending of those funds.

Four years later, debate may continue about the success or failure of the Recovery
Act. But many consider the
RAT Board to be a pioneer in government accountability and transparency.

From its conception, the RAT Board was a model of how the government could
leverage new technology to
track data and promote transparency in the way its spends money.

Earl Devaney, former RAT Board chairman

"Quite frankly, I was very skeptical when I first took the job about how we would,
not only protect
[approximately $804 billion], but the notion that we could make that transparent
to the American public was
also a major challenge," said Earl Devaney, former chairman of the RAT Board.

For Devaney, who served 10 years as inspector general at the Interior Department,
the Recovery Act signaled
a major change in attitude for the IGs who made up the RAT Board. Rather than
meerly detecting fraud and
waste after the fact, they were using software previously employed by the
intelligence and law enforcement
community to track government spending and prevent fraud and waste from
occuring.

"We applied those tools to government spending with the notion that if they worked
in those other fields, they
would work in government spending and sure enough they did," he said. "We were in
a position to be able to
tell procurement officers, for instance, that you've got four chunks of money
going out. You've already sent
one chunk to the wrong place. Don't send the other three to the wrong place. That
differed significantly from
the old way of doing business where IGs and other enforcement types typically came
along a couple of years
later and realized that all the money had gone to the wrong place."

The Recovery Act Operation Center used advanced analytics to "look at open source
data that hadn't been
available previously with with emergence of the Internet and things like that,"
said Michael Wood, Recovery
Board executive director. "And the ability to go through large volumes of data and
ferret out either trends or
potential problem areas. We worked pretty carefully with the IGs and agencies to
try and identify programs
that might be high risk and then use some advanced software. We were using
Palantir. There were a few
others that we use now to look at both the structured and unstructured data to see
if we could identify issues
and problems."

Transparency is a 'force multiplier for accountability'

The RAT Board's greater legacy, though, might be in the area of transparency.

"It brought an unprecedented level of transparency to government spending,"
Devaney said. "I don't think the
American public had ever had the opportunity to see how the government actually
spent their money except
in sort of an abstract way."

The transparency largely came out of the website the RAT Board created that
provided citizens with a way to
keep track of Recovery money.

"Recovery.gov had a particular
feature that the public loved, which was being able to put your ZIP code into the
site and drill down into your
own neighborhood and see where the money was being spent around you," Devaney
said. "From the public's
perspective, it was an opportunity for people to see who was actually spending the
money in our
neighborhoods."

The RAT Board's successful combination of accountability and transparency helped
it protect the $804 billion
in Recovery funds better than many people had expected or hoped.

Kathleen Tighe, chairwoman, RAT Board

"That kind of money attacts all kinds of thieves and people who would like to
plunder that money," Devaney
said. "So, when we first started the endeavor, I had imagined that it would be a
far greater fraud and waste
than we actually found. It turned out ... to be less than half a percent, when
most pundits predicted it would
be 5 or 6 percent of the money. I think a combination of the technology we used
and the fact that this money
was so transparent provided an opportunity for enforcement types like myself to
see fraud prevented."

As important as the technology was to preventing fraud, waste and abuse, Devaney
called transparency a
"force multiplier for accountability."

"I'll go to my grave believing that the transparency of this money prevented the
thieves from coming around
and trying to get it," he said. "There's so much sunlight on this money that sort
of like a burglar going into a
neighborhood and seeing a house a lit up with a barbed wired fence and a sign that
said 'Maneating dog inside.'
They're going to go down the street and rob the house that's dark."

White House, Congress recognize a good thing

People in the White House and on Capitol Hill began to take notice of the RAT
Board's ability to cut down on
fraud and wast.

"Since we started this thing two years ago, we have more than 75,000 projects,
more than 260,000 awards
and that's a lot of transactions," said Vice President Joe Biden, who would
oversee the implementation of a
new initiative. "So we
asked the Recovery Board to tell us how many dollars are involved in cases
where there have been convictions. … It was less than $3 million, not billion, $3
million out of $480 billion in
contracts grants, loans and entitlements that were obligated. No matter which way
you cut it, the fraud so far
has been remarkably low, less than a fraction of a percent."

Inspired by the success of the RAT Board, President Obama created the Government
accountability and Transparency Board in a June 2011 executive order as
part of the administration's Campaign to Cut Waste initiatives. The board was
designed to increase
transparency surrounding federal spending, modeled on a similar effort to track
spending disbursed by the
2009 Recovery Act.

According to the executive order, the GAT Board was charged with providing
"strategic direction for
enhancing the transparency of Federal spending and advance efforts to detect and
remediate fraud, waste,
and abuse in Federal programs." The 11 members, who were chosen by the president
from agency inspectors
general, CFOs and deputy secretaries plus a senior official from the Office of
Management and Budget, were
tasked with identifying ways to reduce spending by applying the lessons learned
from the RAT Board.

"The Government accountability and Transparency Board was put together to work
with
the Recovery Board
and OMB and the other agencies to say what went right, what went wrong with
Recovery Act reporting,
because we knew that we were transformational in Recovery Act reporting," said
Danny Werfel, controller of
the Office of Management and Budget and GAT Board member. "We knew that
Recovery.gov was innovative
and different. We knew that, for the first time, we were tracking information in
quicker timeframes on a
comprehensive basis and making information available on the Web on federal
programs that had not been
made available before. So, something new happened during the Recovery Act. There
were many successes."

The president appointed Devaney the GAT Board's interim director until July 2011, when
Richard Ginman,
director of Defense Department procurement policy, was appointed to succeed
him.The remaining members
of the
board are:

David Williams - Vice Chair, and Inspector General, U.S. Postal Service

At the time of the GAT Board's formation, Devaney touted the three pillars of the
new board's mission: clean
data, transparency and accountability, all of which can be tracked back to the
work of the RAT Board.

Danny Werfel, controller, Office of Management and Budget

Devaney said the platform the Recovery Board built was one that the rest of the
government could use. The
formation of the GAT Board showed a willingness by the executive branch to spread
that type of oversight
elsewhere.

A similar cultural shift has taken place on Capitol Hill.

"There are parts of Congress that watched the Recovery very closely and were very
interested in what we were
doing and what kind of technology we were using, and they saw the results,"
Devaney said.

The Recovery Board, which was due to wrap up its duties on Sept. 30, was given a
new lease on life in
February when it was assigned oversight of the $60.2 billion in Hurricane Sandy assistance
funding.

"Congress clearly wants to ensure that aid funds are not misspent or diverted
improperly," Recovery
Chairwoman Tighe said in a release. "The money is designed to help rebuild the
lives of the victims of
superstorm Sandy, which invaded the East Coast and left a path of devastation in
late October. New Jersey and
the New York City area were especially hard hit."

Hurdles remain for wider implementation of RAT Board lessons

Despite these bright spots, barriers to greater accountability and transparency
still remain.

"One is that the government doesn't have any single alpha-numeric numbering system
for contracts and
grants," Devaney said. "In Recovery, there were 29 government agencies that had
Recovery money with 29
different numbering systems, some of which went back to George Washington. So,
every department really
liked their numbering system because it made sense to them, but it doesn't make
sense when you're trying to
use technology to roll all those things into one system."

Werfel echoed Devaney's assessment.

"The fact that information in federal accounting, budget or financial management
program, etc., lacked
standardization, that's where most of the challenges came in terms of ensuring the
information was reliable,
ensuring that the information could be digestable by the public, could be linked
up to answer key questions
that the public had, it all came back to that foundation," he said. "What we're
doing right now in this
environment is figuring out exactly what the right roadmap is to provide more
standardization."

Another hurdle to overcome is resistence from agencies to alter the way they do
their jobs.

"They like the way they do business and would prefer not to, perhaps, change,"
Devaney said. "And change
was what this was all about and it would require certain agencies to change not
only their numbering systems
but perhaps some ofheir IT configurations. So, the agencies don't like to be told
what to do. OMB rarely likes
to direct them to do something, so we've got some malaise in the executive branch,
but I think Congress in
particular saw what we did and thinks it's a good idea and I wouldn't be surprised
if they embedded it in
future bills."

Despite these hurdles, Tighe believes the lessons learned from RAT Board's efforts
will bring greater
transparency and accountability in government spending. As that happens, financial
managers will have
access to tools that will help them combat waste, fraud and abuse.

"I think it really started a whole new era," Tighe said. "I don't think anybody
can turn the clock back now. I
think everbody's looking for ways to make spending display more accurate and let's
look at USASpending and
see if we can enhance it. So, I think we've started the beginnings of a dialogue
that will work to make the
public more tuned in to federal spending."